00:00And a new review finds Federal Reserve supervisors repeatedly missed warning signs ahead of Silicon Valley Bank's 2023 collapse.
00:07The draft says regulators issued dozens of warnings but failed to force action on the bank's interest rate and liquidity
00:13risks.
00:14Fed Vice Chair Michelle Bowman says the findings point to a broader culture of supervisory indecision.
00:21Bloomberg's international economics and policy correspondent Mike McKee is back with us now.
00:24He's been listening to the comments from one Vice Chair, Bowman.
00:27What's your takeaway here? A bit of a surprise. This is being announced now.
00:30But we know that since the collapse of that bank, there has been this effort on the Fed's part to
00:34do a postmortem to try to figure out what happened there.
00:36There have been two postmortems. Michael Barr, the previous Vice Chairman for Supervision, put together one shortly after the bank
00:42failed in March of 2023.
00:45He found a culture of problems but also suggested that a 2018 law that loosened some restrictions was part of
00:55the cause.
00:55There have been a lot of people who suggested, and if you watched social media in those days, that social
01:00media contributed to the run on the bank.
01:02And those two things, the Mickey Bowman report says, were not true, that the 2018 law did not have an
01:08impact.
01:08And she clears the former Vice Chair at the time, Randall Quarles, from any responsibility.
01:16She also says that social media didn't really start until the bank run was well underway.
01:23They do have a bunch of recommendations on what should be done going forward that they define the primary objective
01:32now is to have examiners find things that could go wrong in terms of threats to the system rather than
01:39just procedural or documentation issues at the banks.
01:42They are expanding supervisory options, and she says, addressing the culture problem that comes from, and this is the line
01:50that came out of the report that's really interesting.
01:53The review revealed that too many staff members feel it is personally safer to take no action than to risk
01:59taking the wrong action.
02:01So they're trying to change that culture now.
02:03Some more empowerment, perhaps.
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